Purpose – This paper aims to focus on a number of unexpected disclosures by major Australian banks, to highlight the subjectivity of financial reports and their failure to present an accurate portrayal of the underlying realities, and to propose that corporate governance disclosures are required to provide reassurance that financial reports are trustworthy. Design/methodology/approach – Mouck's institutional framework of financial regulation portrays financial reporting as a “game” played within a set of rules. It provides insights about the subjectivity of financial reports which are illustrated with archival evidence from banks' reports and activities. Findings – The banks' financial reports were shown, in the light of later revelations, to portray an unrealistic view of their operations. Disclosures about corporate governance practices play a strong legitimising role, enhancing perceptions that financial reports correspond with organisational realities. Research limitations/implications – This study considers a narrow population of companies within one industry. By extending the focus, greater evidence could be provided that accounting standards and financial reporting requirements have lost their connection with business practices. Practical implications – In spite of financial reporting reforms, financial reports are becoming less reflective of companies' activities and performance. This questions the usefulness of accounting standards, and the effectiveness of regulatory systems. Future reforms to accounting standards need to address these issues. Originality/value – The paper demonstrates the contention that the financial reports of several Australian banks fail to match the realities that lie beneath is really a broader challenge to the usefulness and credibility of Australia's system of financial reporting and regulation.